RIBO cautions brokers about sales incentives

Ontario’s broker self-regulator has witnessed enough of an increase in inducements and sales incentives to issue a bulletin to brokerage principals throughout the province.

The Registered Insurance Brokers of Ontario (RIBO) sent the notice last month.

“We are seeing a resurgence in marketing programs from insurers offering an inducement to brokerage staff to direct or steer new business to a particular insurer,” it noted. “Sample incentives may be that for every piece of new business written, the insurer offers the broker, for example, the equivalent of a $5 gift card and a chance at a grand prize (for example, a trip somewhere).”

RIBO reminded brokers that marketing guidelines are spelled out in the Principal Broker Handbook, which was recently updated. It holds that the client’s interest is paramount in choosing appropriate coverages, and that individual brokers must disclose any conflict of interest prior to placing the business.

Insurance Brokers Association of Ontario CEO Randy Carroll suggests there is a discrepancy in the Principal Broker Handbook related to brokerage staff, particularly service representatives accepting incentives with the approval of the principal broker.

“I find this in itself somewhat odd and troubling, as we know that incentives that are tied or dependent upon the sale of an insurance product cannot be given to the consumer, but on the other hand, as professionals we can accept a gift resulting from their decision,” Carroll notes in the March 2012 issue of The Ontario Broker. “Where does ‘professional’ fit in here? Have we thought about our professional image or do we really care? From my perspective, I believe we truly should.”

Carroll issued a challenge for insurance companies to “work smarter and let’s work together. If you are compelled to offer a sales incentive program, then allow the brokerage to gain pubic goodwill versus tarnishing the value of our profession.”